Rejection of “special status” for Andhra Pradesh

Why in news?

The Centre has rejected the Andhra Pradesh (AP) government's demand for Special Category Status for the state.

What is the special category status?

Rationale - The Constitution does not have any provision for categorisation of any state as a Special Category Status (SCS) State.
But the Centre has assisted some states with funds in the past, since 1969.
This was as allocated by the former Planning Commission body called the National Development Council (NDC).
The assistance was in consideration of the historical disadvantages of certain states when compared to others.
Criteria - The NDC granted this status based on some features such as:

Advantages - The SCS states would receive funding for Centrally Sponsored Schemesin the 90-10 ratio i.e 90% of the funds would come from the Centre as against 60% for normal category states.
The remaining would be funded by the state governments.
States - The NDC first accorded SCS in 1969 to Jammu and Kashmir, Assam and Nagaland.
Over the years, 8 more states were added to the list.
They are Arunachal Pradesh, Himachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Tripura and, in 2010, Uttarakhand.
These 11 states got the benefits of SCS until 2014-15 when the 14th Finance Commission proposed major changes.

What are the 14th Finance Commission's recommendations?

14th Finance Commission headed by YV Reddy submitted its report in 2014.
It redefined the financial relationship between the Centre and the states for the five-year period ending 2019-20.
The Commission notably did away with the ‘special category’ status for states, except for the Northeastern States and 3 hill states (J&K, Himachal Pradesh and Uttarakhand).
Instead, it suggested that the resource gap of each state be filled through ‘tax devolution’.
It thus urged the Centre to increase its share of tax revenues to the states from 32% to 42%.
If devolution alone could not cover the revenue gap for certain states, the Centre could provide a revenue deficit grant.
The Commission stated that Andhra Pradesh would end up as a revenue deficit state.
It thus recommended that the Centre provide a revenue deficit grant for the period of the 14th Finance Commission.

What does the AP Reorganisation Act provide for?

The state of Andhra Pradesh was bifurcated in 2014 under the Andhra Pradesh Reorganisation Act, 2014.
The Act does not mention ‘special category’.
But it does mention that the Centre would help Andhra Pradesh bridge any resource gap.
Under the ‘Revenue Distribution’ section, the Central Government may make appropriate grants.
It may ensure that benefits and incentives in the form of special development package are given to the backward areas of that State.
But notably, apart from the legislation, the former PM had in the Rajya Sabha assured that AP would be granted special category status.
It was said that Special Category Status would be extended to the successor state of Andhra Pradesh for a period of 5 years.
But the successor government (NDA) has been emphasizing that the 14th Finance Commission did not provide for such treatment.

What is the Centre's stance for AP?

The Union government is of the view that SCS category did exist when the state was bifurcated in 2014.
But after the 14th Finance Commission’s award, such treatment was “constitutionally” restricted and so cannot be accorded.
The Centre however stated that it was willing to provide the “monetary equivalent” of a special category state.
As an additional measure, the Centre has agreed to fund all externally aided projects in Andhra Pradesh in the 90-10 ratio.

What is AP's stance?

AP reiterates that Telugu sentiments and emotions had been hurt and only special category status could assuage them.
It is also maintained that the CM had only been asking for what was provided for in the AP Reorganisation Act.

Source: The Hindu, The Indian Express

Quick Fact

Special Status/Special Provisions for States

It is to be noted that the Special Category Status (SCS) states are different from states with Special Status/Special Provisions.
Special Category Status deals with economic, administrative and financial aspects.
On the other hand, Special Status/Special Provisions empowers legislative and political rights and is offered by constitutional provisions under Part XXI.
Article 370 grants Special Status to the State of Jammu and Kashmir.
Art 371 to 371-J contain Special Provisions for eleven states as given below.
Art 371 specifies the “Special responsibility” to Governor to establish “separate development boards”.
This is in respect of “Vidarbha, Marathwada, and the rest of Maharashtra”, and Saurashtra and Kutch in Gujarat.
The other special provision states are as follows:

Nagaland - Art 371A by 13th Amendment Act, 1962
Assam - Art 371B by 22nd Amendment Act, 1969
Manipur - Art 371C by 27th Amendment Act, 1971
Andhra Pradesh & Telangana - Art 371D by 32nd Amendment Act, 1973; substituted by the Andhra Pradesh Reorganisation Act, 2014
Sikkim - Art 371F by 36th Amendment Act, 1975
Mizoram - Art 371G by 53rd Amendment Act, 1986
Arunachal Pradesh - Art 371H by 55th Amendment Act, 1986
Karnataka - Art 371J by 98th Amendment Act, 2012

Art 371E allows for the establishment of a university in Andhra Pradesh by a law of Parliament.
But this is not really a ‘special provision’.
Art 371I deals with Goa, but does not include any provision that can be termed ‘special’.